Sinochem approaches Temasek on Potash bid: sources

SINGAPORE (Reuters) - China's state-owned chemicals group Sinochem Corp has approached Singapore state investor Temasek to join a consortium that may bid for Canada's Potash Corp , sources with knowledge of the deal said on Tuesday.

The move appeared to underpin Reuters reports that Chinese officials had ordered state companies to meet investment bankers to explore ways to block BHP Billiton's $39 billion bid for Potash Corp.

Potash Corp, based in the western Canadian province of Saskatchewan, is facing a $130-a-share hostile takeover bid from BHP, the world's largest miner.

Potash, the world's No. 1 potash producer, has rejected the offer as "grossly inadequate."

Temasek, which manages $134 billion in assets, has been approached, one of the sources told Reuters, but added it had made no decision on whether it will join the consortium.

It was unclear if this potential consortium will bid to buy a blocking stake or make a full counter offer.

But given the experience the Chinese had with Rio Tinto , a blocking stake is unlikely and it will be a full bid if it happens, according to a source familiar with the matter.

"The consortium is coming along, but the situation is still fluid," said the source.

Rio last year scrapped a $19.5 billion tie-up with Chinese state-owned metals group Chinalco, sparking a falling-out which bruised Sino-Australian ties.

Chinalco had teamed up with U.S. aluminum producer Alcoa Inc to pick up a 9 percent stake in Rio Tinto and become the miner's biggest single shareholder.

The move forced BHP to raise an all-share offer for Rio when it went hostile. In the end BHP scrapped its bid due to the global economic slump and Rio's $40 billion debt pile, and never had to resolve how it would deal with Chinalco.

BEHIND THE SCENES

An Asia-based resources banker said it is going to be very difficult for a Sinochem-led consortium to succeed in an approach for Potash Corp because of political opposition in Canada.

The consortium might need to bring in international players to make the bid more legitimate.

The banker said other global diversified miners are also searching for potential options behind the scenes.

Temasek, which had high exposure to banks at the start of the credit crisis, has been diversifying its portfolio with investments in miners and energy companies.

Earlier this year it agreed to buy $500 million worth of non-voting convertible preferred shares in Chesapeake Energy Corp and later invested more.

The state investor also bought securities worth C$500 million ($483 million) in Inmet Mining and $50 million in Platmin Ltd this year.

A Temasek spokesman declined to comment and Sinochem was not immediately available to comment.

The sources declined to be identified because the talks are not public.

(Additional reporting by Denny Thomas and Joseph Chaney in Hong Kong; Editing by David Cowell)

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